Option Payoffs: You Have Sold a Call Option on ABC

question 46

Multiple Choice

Option payoffs: You have sold a call option on ABC Co. stock with a strike price of $40. You do not intend to make any other transactions before the options expiration date. The current stock price is $20. Which of the following statements best describes your hopes for the stock?

• A) You want the stock price to fall.
• B) You want the stock price to rise.
• C) You are indifferent, as long as the stock price stays under $40.
• D) It doesn't matter; you are indifferent to changes in the stock price.

Comprehend the impact of various transactions on the quality of income ratio.

Grasp the adjustments needed under the indirect method for cash flow statement preparation.

Identify the categories of cash flows in the statement of cash flows.

Understand the concept of cash equivalents.

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